Bluesy Bonnie Raitt-inflected tunes are the specialty of the singing-songwriting half of the couple who owns this apartment in the Murray Hill section of Manhattan, so you're unlikely to hear her covering the Beatles' 1967 hit "With a Little Help from My Friends." Yet she's the first to admit that it's an appropriate theme song for the cozy 600-square-foot alcove studio the two women have owned since 2006.

"We knew we needed a designer," says her theater producer partner. "We had a mix of furniture with no cohesion whatsoever." But the duo also had a tight budget, so they turned to their friends Matthew White and Frank Webb of White Webb.

White admits, "We don't normally take on projects this small, but it became a family effort, which helped keep costs down."

Their aim? Make the studio feel like more than one room, mitigate the scarcity of light while retaining a warm palette, use green materials wherever possible and avoid major reconstruction that might upset the co-op board. It was a tall order. Friendships have been known to dissolve over less.

Thankfully, storage wasn't also an issue. A bathroom and dressing room off the small entryway came equipped with plenty of closet space, and just inside the main room were two floor-to-ceiling cabinets where the women could stash books, a TV and audio equipment. That left the room a blank canvas, which White Webb visually divided into three sections by devising custom wall panels upholstered in grass cloth. Aside from cleverly breaking up the tunnel effect of the long room, explains Webb, "they become architectural elements that correspond to each section: work space, living area and dining area."

"They provide visual punch," adds White, "but they also enabled us to put picture lights on each and drop the cords down the backs of the panels to avoid rewiring." The songwriter found $10 dimmers at Home Depot that modulate the light from a control behind the sofa. Two Ziyipole lamps by Thomas O'Brien for Circa Lighting further delineate the space, emphasize its height and bring in still more light. The designers employed a similar trick in the bed alcove opposite the sofa, covering the back wall with upholstered panels that hide cords for bedside lamps and a picture light above a favorite painting.

That painting set the color scheme for the studio. White Webb pulled two palettes—one orange and peach, the other blue and green—from the picture. The couple chose the former mainly because, the producer admits, "I tend toward the more traditional, and this felt warmer and more comfortable."

Still, though the couple has a full-time home in Columbia County, New York, that they filled with antiques, they recognized that a small space required simpler lines and a degree of modernity to keep it from feeling cluttered. "They were okay going a little deco, but it had to be very subtle and not too specific," says White, pointing out the custom Jean-Michel Frank–inspired sofa. A drop-leaf Davis desk with a Shaker-ish profile also jibed with the clean, not specifically period aesthetic. "It's more about the layering of the textiles and colors," White says. "The furniture is a plain background to receive them."

Among the eco-conscious decisions were a bamboo bench by the bed, low-VOC paint (Rich Cream from Benjamin Moore's Aura line), a dining banquette recycled from another White Webb project and an undyed natural wool carpet. Custom designs—the sofa, dining table, cork-upholstered ottomans—were required, explains White, "because some pieces had to fit just perfectly." But they balanced the budget with lower-priced furnishings, like chairs and round occasional tables from West Elm.

The main tactic for staying on budget, however, was to call on family and friends to help realize the project. The women's upstate contractor built the wall panels and a room screen that hides the kitchen. A hobbyist woodworker neighbor made the bedside tables designed by White. The songwriter's brother, a master mechanic, helped her tear down ornate moldings, strip piano hinges, sand cabinet doors and rip out old wires. Her sister helped paint, and she sewed the Roman shade, pillow covers, bedspread and bed skirt. Even the designers pitched in for the installation.

Small Space SolutionsFrom Matthew White and Frank Webb:

2. People assume light colors will make a room feel larger, and we agree, provided the space is naturally light. But if it's dark, embrace the darkness. It enhances the coziness of the room and makes the edges disappear, so it feels more expansive.

3. Find pieces that can serve multiple purposes, like a desk that works as a dining table. Or put furniture on castors so it can be repositioned for double duty in the same space.